‘It’s quite a stitch-up, taking the goodwill you’ve purchased and eradicating the value. If you buy a business that has a five-star Google rating and it goes to zero, that’s going to hurt you.’

Business

‘UberEats wiped out $30k overnight’

by Frank Chung

22nd Aug 2019 4:01 PM

EXCLUSIVE

A Sydney restaurant owner has accused UberEats of wiping $30,000 from his business overnight with the press of a button - a move that could cost him up to $120,000 this year alone.

Former advertising executive James Townend, 34, purchased the popular Europan cafe and bakery in Rose Bay earlier this year after discovering a passion for baking.

But according to the Kiwi, what happened next highlights a little-known but "disheartening" double standard at the ride-sharing giant that hurts small operators at the expense of big corporates like McDonald's and KFC.

"When I bought the business it was pretty standard stuff, but a decent part of the purchase price was tied up in goodwill," said Mr Townend, who asked news.com.au not to reveal exactly how much he paid. "These days goodwill is not just customers walking through your door but also customers buying through UberEats."

At the time, Europan was making around 10 to 15 per cent of its annual sales through UberEats, selling things like cakes and pastries, bacon-and-egg rolls and even coffees.

Unlike many restaurants that complain they struggle to make profit on delivery services like UberEats and Deliveroo, the previous owner described it as a "good earner" that helped "keep the doors open".

Mr Townend estimates roughly $30,000 of the purchase price was goodwill attributed to annualised sales through UberEats. "I was looking forward to that, given my background in digital advertising, I thought I could grow (those sales)," he said.

But when he took over running the business at the start of July, he got his first taste of dealing with the US company. "All the transfers like the Google listing, Facebook pages, it was a really straightforward process," he said. "One assigns the other as being the new owner and Bob's your uncle, all those ratings sit with you."

The process of transferring ownership with UberEats, by contrast, was "really convoluted, really dark, they don't provide any information". "I called them up, there's no one there to help you, no information, you get passed through different departments," he said.

Eventually, Mr Townend was provided with an online form to change the restaurant's ABN and bank account details - and immediately his sales plummeted.

"My business doesn't list on the front page when you're looking for somewhere in Rose Bay. All the other businesses have ratings and mine doesn't," he said. When he contacted UberEats, he was told it's "because you're new". "The chef's the same, the menu's the same, but they wiped all that data," Mr Townend said.

In three weeks, Mr Townend estimates he lost $10,000 in sales, and he's already had to let staff go. "It's quite a stitch-up, taking the goodwill you've purchased and eradicating the value," he said. "If you buy a business that has a five-star Google rating and it goes to zero, that's going to hurt you. How come with all the other online platforms (it transfers over)?"

The previous owner had been on UberEats for three years and "spent a lot of time and energy building a good profile" by making sure food went out quickly. "That's all been pulled out," Mr Townend said. "When you lose your star rating you lose your search prominence."

UberEats, he says, told him it was a data privacy issue and "standard policy" - but if he were to buy a McDonald's franchise "they have a completely different set of rules".

"Even though the process is the same, just transferring the ABN and bank account details, they transfer all the data as well," Mr Townend said. "They're doing a different set of things for McDonald's, KFC, Subway, Oporto, whoever, but when it comes to the small guy, Uber puts the boot in."

Mr Townend said it was "disheartening to see they're favouring corporates".

"If it wasn't hard enough that they put a cap on your ability to charge the price you need to make ends meet - despite surging people getting a taxi at peak times - here they are snuggling up to big corporates to muscle out regulars," he said.

After being contacted for comment, UberEats has since reached out to Mr Townend and is working to address his concerns.

It's understood UberEats' position is there are different types of change of ownership. In some situations a new owner buys shares in the existing restaurant, in which case the restaurant profile on UberEats stays the same after the change of ownership.

In situations when a new owner buys the "brand" of the existing restaurant but is actually a new company with a different ABN, a new UberEats account is set up under the same business name to protect the previous owner's data privacy, including financial and accounting records.

"We encourage all of our restaurant partners to reach out to us to address any concerns or issues they may be having, and we will work to resolve these with them," an UberEats spokeswoman said. "We want to support restaurants and welcome their feedback to help us improve our service."